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AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Holding all else equal - when the price of a good rises - suppliers increase their quantity supplied for that good






2. A firm that has market power in the factor market (a wage-setter)






3. The change in total product resulting from a change in the labor input. MPL = dTPL/dL - or the slope of total product






4. A group of firms that agree not to compete with each other on the basis of price - production - or other competitive dimensions. Cartel members operate as a monopolist to maximize their joint profits






5. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability






6. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity






7. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0






8. The change in quantity demanded resulting from a change in the price of one good relative to other goods






9. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.






10. Pmc < MR = MC and Pmc > minimum ATC so outcome is not efficient - but profit = 0.






11. Production of the combination of goods and services that provides the most net benefit to society. The optimal quantity of a good is achieved when the MB = MC of the next unit and only occurs at one point on the PPF






12. The total quantity - or total output of a good produced at each quantity of labor employed






13. Entry (or exit) of firms does not shift the cost curves of firms in the industry






14. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)






15. The sum of consumer surplus and producer surplus






16. In the case of a public good - some members of the community know that they can consume the public good while others provide for it. This results in a lack of private funding and forces the government to provide it






17. Two goods are consumer complements if they provide more utility when consumed together than when consumed separately






18. The difference between total revenue and total explicit costs






19. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good






20. Ed = 0 - no response to price change






21. Ed = (%dQd)/(%dP). Ignore negative sign






22. Exists at the point where the quantity supplied equals the quantity demanded






23. All firms maximize profit by producing where MR = MC






24. Substitutes - cost as percentage of income - and time to adjust to price changes all influence price elasticity






25. Characterized by many small price-taking firms producing a standardized product in an industry in which there are no barriers to entry or exit






26. For one good - constrained by prices and income - a consumer stops consuming a good when the price paid for the next unit is equal to the marginal benefit received






27. Two goods are consumer substitutes if they provide essentially the same utility to consumers






28. The output where AVC is minimized. If the price falls below this point - the firm chooses to shut down or produce zero units in the short run






29. Ex -y = (%dQd good X) / (%d Price Y). If Ex -y > 0 - goods X and Y are substitutes. If Ex -y < 0 - goods X and Y are complementary






30. Entry of new firms shifts the cost curves for all firms downward






31. Goods that are both nonrival and nonexcludable. One person's consumption does not prevent another from also consuming that good and if it is provided to some - it is necessarily provided to all - even if they do not pay for that good






32. Es = (%dQs) / (%dPrice)






33. A good for which higher income decreases demand






34. Models where firms are competitive rivals seeking to gain at the expense of their rivals






35. A legal maximum price above which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent shortage






36. The difference between your willingness to pay and the price you actually pay. It is the area below the demand curve and above the price






37. The output where ATC is minimized and economic profit is zero






38. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand






39. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good






40. The proportion of the tax paid by the consumers in the form of a higher price for the taxed good is greater if demand for the good is inelastic and supply is elastic






41. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good






42. Ed = 1






43. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.






44. Models where firms agree to mutually improve their situation






45. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices






46. TR = P * Qd






47. The difference between the price received and the marginal cost of producing the good. It is the area above the supply curve and under the price






48. The difference between total revenue and total explicit and implicit costs






49. AFC = TFC/Q






50. The marginal utility from consumption of more and more of that item falls over time